S. 3640, CARES Windfall for the Wealthiest Repeal Act
Summary
S. 3640, the CARES Windfall for the Wealthiest Repeal Act, was introduced in the Senate on May 7, 2020 by Mr. Whitehouse (for himself and others) and referred to the Committee on Finance. Its stated purpose is to amend the Internal Revenue Code of 1986 to allow certain taxpayers a 2-year carryback of net operating losses and to restore and make permanent the limitation on excess business losses of non-corporate taxpayers. Section 2 amends section 461(l)(1) so that, for a taxable year beginning after December 31, 2017, any excess business loss of a taxpayer other than a corporation shall not be allowed. Section 3 addresses the 2-year carryback of losses arising in certain periods.
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Cite this document
“S. 3640, CARES Windfall for the Wealthiest Repeal Act.”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/bills-bills-116s3640is-bills-116s3640is/
, SHA-256 f632129ecf57943759d6260e44ea9df6092c7f4521e990d620476719042b96c6.Full text
II
116TH CONGRESS
2D SESSION
S. 3640
To amend the Internal Revenue Code of 1986 to allow certain taxpayers
a 2-year carryback of net operating losses and to restore and make
permanent the limitation on excess business losses of non-corporate tax-
payers.
IN THE SENATE OF THE UNITED STATES
MAY 7, 2020
Mr. WHITEHOUSE (for himself, Mr. BROWN, Mr. LEAHY, Mr. SANDERS, Mr.
UDALL, Mr. BLUMENTHAL, Mr. DURBIN, Mr. MARKEY, Mr. VAN HOL-
LEN, Mr. KING, Ms. WARREN, Ms. HARRIS, Mr. CARPER, Ms. KLO-
BUCHAR, Mr. COONS, Mr. REED, Mr. MURPHY, Mrs. GILLIBRAND, Mr.
BOOKER, Ms. BALDWIN, Ms. SMITH, Ms. HIRONO, Mr. SCHATZ, and Mr.
MERKLEY) introduced the following bill; which was read twice and re-
ferred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to allow cer-
tain taxpayers a 2-year carryback of net operating losses
and to restore and make permanent the limitation on
excess business losses of non-corporate taxpayers.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
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4 This Act may be cited as the ‘‘CARES Windfall for
5 the Wealthiest Repeal Act’’.
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1 SEC. 2. LIMITATION ON EXCESS BUSINESS LOSSES OF NON-
2 CORPORATE TAXPAYERS RESTORED AND
3 MADE PERMANENT.
4 (a) IN GENERAL.—Section 461(l)(1) of the Internal
5 Revenue Code of 1986 is amended to read as follows:
6 ‘‘(1) LIMITATION.—In the case of taxable year
7 of a taxpayer other than a corporation beginning
8 after December 31, 2017, any excess business loss
9 of the taxpayer for the taxable year shall not be al-
10 lowed.’’.
11 (b) CONFORMING AMENDMENT.—Section 461 of
12 such Code is amended by striking subsection (j).
13 (c) EFFECTIVE DATE.—The amendments made by
14 this section shall take effect as if included in section
15 2304(a) of the Coronavirus Aid, Relief, and Economic Se-
16 curity Act.
17 SEC. 3. CERTAIN TAXPAYERS ALLOWED 2-YEAR
18 CARRYBACK OF NET OPERATING LOSSES
19 ARISING IN CERTAIN PERIODS.
20 (a) TWO-YEAR CARRYBACK OF LOSSES ARISING IN
21 CERTAIN PERIODS.—
22 (1) IN GENERAL.—Section 172(b)(1)(D)(i) of
23 the Internal Revenue Code of 1986 is amended—
24 (A) by striking ‘‘arising in a taxable year
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25 beginning after December 31, 2017, and ending
26 before January 1, 2021’’ and inserting ‘‘arising
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1 in the first taxable year beginning after August
2 31, 2019’’, and
3 (B) by striking ‘‘5 taxable years’’ in sub-
4 clause (I) and inserting ‘‘2 taxable years’’.
5 (2) CONFORMING AMENDMENTS.—
6 (A) The heading for section 172(b)(1)(D)
7 of such Code is amended by striking ‘‘2018,
8 2019, AND 2020’’ and inserting ‘‘CERTAIN PERI-
9 ODS’’.
10 (B) Section 172(b)(1)(D)(v) of such Code
11 is amended—
12 (i) by striking subclause (II), and
13 (ii) by striking ‘‘SPECIAL RULES’’ and
14 all that follows through ‘‘If the 5-year
15 carryback period’’ and inserting the fol-
16 lowing: ‘‘SPECIAL RULE FOR ELECTION
17 UNDER PARAGRAPH (3) TO EXCLUDE SEC-
18 TION 965 YEARS.—If the 2-year carryback
19 period’’.
20 (b) CARRYBACK ONLY ALLOWED FOR SMALL BUSI-
21 NESSES.—
22 (1) IN GENERAL.—Section 172(b)(1)(D)(i) of
23 such Code is amended by striking ‘‘net operating
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24 loss arising’’ and inserting ‘‘net operating loss of an
25 eligible small business arising’’.
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1 (2) ELIGIBLE SMALL BUSINESS.—Section
2 172(b)(1)(D) of such Code is amended by adding at
3 the end the following new clause:
4 ‘‘(vi) ELIGIBLE SMALL BUSINESS.—
5 For purposes of clause (i), the term ‘eligi-
6 ble small business’ means a corporation or
7 partnership which—
8 ‘‘(I) meets the gross receipts test
9 of section 448(c) (applied by sub-
10 stituting ‘$15,000,000’ for
11 ‘$25,000,000’ each place it appears)
12 for the taxable year in which the loss
13 arose (or, in the case of a sole propri-
14 etorship, which would meet such test
15 if such proprietorship were a corpora-
16 tion), and
17 ‘‘(II) elects the application of this
18 subparagraph.
19 Any election under subclause (II) shall be
20 made in such manner as may be prescribed
21 by the Secretary, and shall be made by the
22 due date (including extension of time) for
23 filing the return for the taxpayer’s the tax-
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24 able year in which the loss arose. Any such
25 election, once made, shall be irrevocable.’’.
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1 (c) DISALLOWED FOR CERTAIN TAXPAYERS.—Sec-
2 tion 172(b)(1)(D) of such Code, as amended by the pre-
3 ceding provisions of this Act, is amended by adding at the
4 end the following new clauses:
5 ‘‘(vii) CARRYBACK DISALLOWED FOR
6 CERTAIN TAXPAYERS.—Clause (i) shall not
7 apply with respect to any loss arising in a
8 taxable year in which—
9 ‘‘(I) the taxpayer (or any related
10 person) is not allowed a deduction
11 under this chapter for the taxable
12 year by reason of section 162(m) or
13 section 280G, or
14 ‘‘(II) the taxpayer (or any related
15 person) is a specified corporation for
16 the taxable year.
17 ‘‘(viii) SPECIFIED CORPORATION.—
18 For purposes of clause (vii)—
19 ‘‘(I) IN GENERAL.—The term
20 ‘specified corporation’ means, with re-
21 spect to any taxable year, a corpora-
22 tion the aggregate distributions (in-
23 cluding redemptions) of which during
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24 all taxable years ending after Decem-
25 ber 31, 2017, exceed the sum of appli-
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1 cable stock issued by such corporation
2 and 5 percent of the fair market value
3 of the stock of such corporation as of
4 the last day of the taxable year.
5 ‘‘(II) APPLICABLE STOCK
6 ISSUED.—The term ‘applicable stock
7 issued’ means, with respect to any
8 corporation, the aggregate value of
9 stock issued by the corporation during
10 all taxable years ending after Decem-
11 ber 31, 2017, in exchange for money
12 or property other than stock in such
13 corporation.
14 ‘‘(III) CERTAIN PREFERRED
15 STOCK DISREGARDED.—For purposes
16 of subclause (I), stock described in
17 section 1504(a)(4), and distributions
18 (including redemptions) with respect
19 to such stock, shall be disregarded.
20 ‘‘(ix) RELATED PERSON.—For pur-
21 poses of clause (vii), a person is a related
22 person to a taxpayer if the related person
23 bears a relationship to the taxpayer speci-
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24 fied in section 267(b) or section
25 707(b)(1).’’.
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1 (d) ADVANCE CARRYBACK OF ESTIMATED NET OP-
2 ERATING LOSSES ARISING IN 2020.—
3 (1) IN GENERAL.—In the case of any taxpayer
4 expecting a net operating loss for the first taxable
5 year beginning after August 31, 2019, such taxpayer
6 may file an application with the Secretary of the
7 Treasury for an advance carryback adjustment of
8 the tax for a prior taxable year that would be af-
9 fected, by reason of the amendments made by this
10 section, by so much of such expected net operating
11 loss as does not exceed $100,000.
12 (2) APPLICATION.—The application filed under
13 paragraph (1) shall set forth in such detail and with
14 such supporting data and explanation as the Sec-
15 retary may require an estimate of the taxpayer’s net
16 operating loss that will arise in such taxable year.
17 (3) DUE DATE FOR APPLICATION.—An applica-
18 tion under this subsection may not be filed later
19 than the due date (including extensions of time) of
20 the return for the first taxable year beginning after
21 August 31, 2019.
22 (4) ALLOWANCE OF ADJUSTMENTS.—Not later
23 than 30 days after the date on which an application
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24 for an advance carryback adjustment is filed under
25 paragraph (1), the Secretary shall dispose of such
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1 application under rules similar to the rules of section
2 6411 of the Internal Revenue Code of 1986.
3 (5) REDUCTION OF NET OPERATING LOSS FOR
4 APPLICATION YEAR.—The amount of any net oper-
5 ating loss (determined without regard to this para-
6 graph) of the taxpayer for any taxable year from
7 which an advance carryback adjustment is made
8 under this subsection shall be reduced (but not
9 below zero) by the amount of estimated net oper-
10 ating loss taken into account in determining an ad-
11 vance carryback adjustment of the taxpayer under
12 this subsection.
13 (6) RECAPTURE.—The taxpayer’s tax imposed
14 by chapter 1 for such taxable year shall be increased
15 by the excess (if any) of—
16 (A) the reduction in tax for all prior tax-
17 able years by reason of an advance carryback
18 adjustment under this subsection, over
19 (B) the reduction in tax for all prior tax-
20 able years by reason of a net operating loss fi-
21 nally arising in the taxable year to which the
22 application under this subsection relates.
23 (7) DENIAL OF DOUBLE BENEFIT.—The Sec-
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24 retary shall provide such rules or guidance as is nec-
25 essary for coordination of the application of this sec-
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1 tion with the provision of section 6164 of the Inter-
2 nal Revenue Code of 1986.
3 (8) REFERENCES TO SECRETARY.—Any ref-
4 erence to the Secretary of the Treasury in this sub-
5 section shall be treated as including a reference to
6 the Secretary’s delegate.
7 (e) EFFECTIVE DATE.—The amendments made by
8 this section shall take effect as if included in the enact-
9 ment of section 2303(b) of the Coronavirus Aid, Relief,
10 and Economic Security Act.
Æ
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